 Mitigating the Gap between the Rich & the Poor: An Empirical Assessment of Key Trends & Drivers of RedistributionNo 105, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Abstract: The growing inequality of market income has, in the recent past, attracted considerable attention; less so the redistribution of income. This paper analyses key trends and drivers determining the size of income redistribution across households. We show that in the EU increasing redistribution has largely stabilised the distribution of disposable income since the late 1990s. Only developing countries, where lagging income levels do not allow larger welfare programmes, and some advanced countries with a dominant free market ideology have recorded an increasing inequality of disposable income alongside a growing inequality of market outcomes. Our evidence from panel data shows that the degree of redistribution increases with percapita income, the share of low-tech, low-income sectors in manufacturing and, in line with the median voter model, when more than half of the voters earn less than the average income in countries with a majoritarian electoral system. JEL-codes: E62 H23 O15 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:105 Access Statistics for this paper More papers in European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Contact information at EDIRC. |
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